- Prachi Singh |
Fourth quarter net sales increased 5.8 percent to 764.3 million dollars at Skechers driven by a 17.1 percent increase in the company’s international wholesale business and a 13.9 percent increase in its company-owned global retail business which included comparable same store sales increases of 3.6 percent. Net sales were 3.56 billion dollars in the full year.
“Skechers achieved new fourth quarter and full-year net sales records, exceeding our fourth quarter guidance range of 710 million dollars to 735 million dollars,” said David Weinberg, COO and CFO of Skechers in a statement, adding, “The strong quarterly growth was primarily the result of a 17.1 percent increase in our international wholesale business, led by China with an increase of 48.5 percent. In addition, our global company-owned retail business grew 13.9 percent on a store base of 571 at year-end.”
Important highlights of Q4 results
The company said, the negative currency translation impact on its gross margins in its international wholesale and international company-owned retail businesses for the fourth quarter was 18.4 million dollars. Further, the company’s business in the United Kingdom was significantly impacted by currency headwinds as its wholesale sales were flat during the fourth quarter in local currency but down 17.9 percent in US dollars.
The net sales increases were offset by a decrease of 11.8 percent in the company’s domestic wholesale business, which included a 4.6 percent decrease due to the launch of the Star Wars footwear collection in the fourth quarter of 2015.
Gross profit for the fourth quarter was 356.2 million dollars, or 46.6 percent of net sales. Earnings from operations were 28.3 million dollars, a decrease of 48.3 percent over the fourth quarter of 2015. Net earnings decreased 77.4 percent to 6.7 million dollars, while diluted net earnings per share for the fourth quarter were 0.04 dollar, compared with 0.19 dollar for the fourth quarter in the prior year.
2016 Financial Results
The company’s gross profit for FY16 was 1.63 billion dollars or 45.9 percent of net sales, and earnings from operations were 370.5 million dollars or 10.4 percent of net sales. Net earnings were 243.5 million dollars and diluted net earnings per share were 1.57 dollars per share.
Commenting on the company’s future outlook, Robert Greenberg, Skechers’ Chief Executive Officer, added, “With record annual sales of over 3.56 billion dollars, 2016 was another significant growth year for Skechers. We expect that 2017, Skechers’ 25th year of business, will be an even more remarkable in terms of product and sales. Our speed to market and ability to react and deliver as trends arise gives us the flexibility to pivot as necessary.”
Combined with its third-party owned stores, the company had 2,012 Skechers stores worldwide at year-end, creating a global network that includes over 500 locations in China, around 60 in each of India, Mexico and Saudi Arabia, and over 50 in each of Australia, Malaysia, South Korea and Taiwan.
Expects net sales to remain flat in Q1
The company said, despite an all-time net sales record in the first quarter of 2016 and Easter falling into the second quarter in 2017, the company believes it will achieve flat to slightly positive sales in its domestic wholesale business, and increases in its international business and company-owned retail stores. The Company expects net sales in the range of 1.050 billion dollars to 1.075 billion dollars and earnings per share of 0.50 dollar to 0.55 dollars for the first quarter of 2017.
The Company expects its ongoing capital expenditures for 2017 to be approximately 50 million dollars to 55 million dollars, which includes corporate office upgrades and an additional 70 to 90 company-owned retail store openings and several store remodels, and an additional 25 million dollars for infrastructure primarily in its China joint venture.
Already in 2017, we’ve achieved mid-single-digit comps in January and high single-digit comps for the first week of February in our company-owned retail stores on a worldwide basis. Based on these key indicators, combined with the many new products delivering later this year—including the domestic launch of You by Skechers in the second quarter—we believe the remainder of the year is on a favorable growth track, and we are well positioned for another record year,” added Weinberg.